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Harris (HRS) Rewards Shareholders With 20% Dividend Hike

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Harris Corporation recently announced a 20.2% year-over-year hike in its quarterly dividend payout. The proposed dividend of 68.5 cents per share or $2.74 on an annualized basis is payable Sep 21, 2018 to shareholders of record as on Sep 7.

Based on the closing price of $164.48 on Aug 27, the proposed dividend affirms a yield of 1.7%. A steady dividend payout is part of the long-term strategy of Harris to provide attractive risk-adjusted returns to its stockholders. In addition, healthy dividend increases at periodic intervals have been one of its strengths.

This is the 17th consecutive year of dividend increase for Harris. The dividend per share of the company has witnessed a CAGR of 12.6% from fiscal 2010 to fiscal 2018. The current hike reflects the inherent financial strength of the company and strong cash flow generated from continued focus on high-margin businesses and a healthy execution of operating plans.

The company has outperformed the industry in the past year with an average return of 35.6% compared with 24% rise for the latter.


 

Harris is poised to benefit from healthy growth dynamics. Earnings estimates of the company for fiscal 2019 have been raised 12.4% year to date to $7.79 per share. From fiscal 2015 to fiscal 2018, revenues have seen a CAGR of 16.7%, reflecting solid order trends. A steady improvement in the two of the most important operating metrics augurs well for Harris’ long-term growth.

In addition, the new tax law, which reduces corporate tax rate significantly, is a huge positive for Harris. Effective tax rate is expected to be approximately 17% in fiscal 2019. The company offered a bullish guidance for fiscal 2019 owing to its impressive performance in fiscal 2018 and benefits from the new tax law. It expects revenues in the range of $6.53-$6.65 billion, up 6-8% from fiscal 2018. EPS from continuing operations in expected between $7.65 and $7.85. Stocks like Harris have been buoyed by the possibility of greater military spending by the United States owing to tensions with North Korea and Iran.

Harris presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Ribbon Communications Inc. (RBBN - Free Report) , sporting a Zacks Rank #1 (Strong Buy) and Clearfield, Inc. (CLFD - Free Report) and QUALCOMM Incorporated (QCOM - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ribbon Communications has a long-term earnings growth expectation of 12%. It delivered an average positive earnings surprise of 168.1% in the trailing four quarters.

Clearfield delivered an average positive earnings surprise of 52.8% in the trailing four quarters.

QUALCOMM has a long-term earnings growth expectation of 10.9%. It delivered an average positive earnings surprise of 19.8% in the trailing four quarters.

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